A federal court has granted the motion for an independent examiner’s appointment to scrutinize Celsius’ business dealings. The order stems from the United States Bankruptcy Court of the Southern District of New York, upon an application on August 18 over “significant transparency issues.”
The scope of the examiner’s investigation, according to the court’s order, will span through the scrutiny of Celsius’ digital asset holdings, their place of storage, an inquest into the status of utility obligations of the firm’s mining business, and the procedure for the payment of taxes amongst others.
The examiner will also look into “why there was a change in account offerings beginning in April 2022 from the Earn Program to the Custody Service for some customers while others were placed in a ‘Withhold Account.'”
The court ordered that Celsius’ officers “fully cooperate” with the appointed examiner and added that the examiner’s investigation does not preclude them from carrying out their own independent investigation. Once the examiner has been set, he is expected to provide a work plan and a budget within seven days.
Within 60 days from the grant of the order, the court expects the examiner to file the results of the investigations, and there shall be no public disclosures of the findings. Other conditions set out in the order include the right of parties to seek relief to expand the Scope of the Investigation and for the examiner to cooperate with government agencies.
The Celsius saga
Celsius has endured a torrid couple of months since it shocked customers by halting the withdrawal of deposits. The move followed Terra’s implosion in May, with Celsius citing unfavorable market conditions.
In the months that followed, the experimental “crypto” bank filed for bankruptcy while staving off an avalanche of lawsuits from disgruntled creditors. The firm’s leadership is not throwing in the towel yet as it harbors ambitious plans to turn things around for the company.
Pundits believe that Celsius’ mining business would be instrumental in its quest to find its feet again. The firm’s Chief Executive Officer, Alex Mashinsky, noted that Celsius can rise again from the ashes like Apple and Delta Airlines, firms that were previously on the brink of bankruptcy. Reports from an internal meeting suggest that Celsius will alter its model to include the charging of commission.
“If the foundation of our business is custody, and our customers are electing to do things like stake somewhere or swap one asset for the other, or take a loan against an asset as collateral, we should have the ability to charge a commission,” said Oren Blonstein, Head of Innovation and Chief Compliance Officer at Celsius Network.
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